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Chest Rockwell

Lack Of Supply

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I listen and read with great interest about the 'lack of supply' issue and that prices will have to go up because of a 'lack of supply'.

However, I cannot see lack of supply being an issue when currently there is a lack of idiots willing to lend at 90%, 95%,100% and 125% LTV. With easy credit EVERYTHING becomes in short supply and eventually so does the credit!

Therefore, the 'lack of supply' theory is nothing more then a VI bullsh1t attempt to get the govt and investors to pump more money into a failed market.

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If there was a true lack of supply either we'd all be living 5 persons to a 2 bed flat or there'd be 5 million living on the streets. As there seems to be adequate shelter for everyone the "lack of supply" looks like nothing more than another made up VI argument to support high prices rather than any sort of actual explanation.

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I listen and read with great interest about the 'lack of supply' issue and that prices will have to go up because of a 'lack of supply'.

However, I cannot see lack of supply being an issue when currently there is a lack of idiots willing to lend at 90%, 95%,100% and 125% LTV. With easy credit EVERYTHING becomes in short supply and eventually so does the credit!

Therefore, the 'lack of supply' theory is nothing more then a VI bullsh1t attempt to get the govt and investors to pump more money into a failed market.

I think local markets vary hugely. Round my area there's a marked shortage of 'average' 3-bed semis for sale. Anything decent and (especially)under the 250K stamp duty threshold is in strong demand. When I walk round my area, 'to let' boards for these sort of houses outnumber 'for sale' boards by 10 to 1. I think negative equity is now having a big impact on peoples ability or willingness to sell, and keeping prices for those few trickling onto the market artificially high. I can see this impasse continuing untill forced sales or repossessions become a bigger factor in the number of transactions.

I'm trying to sell and buy (similar property so HPC or HPI not a big factor) and not only is finding a suitable property difficult, but any offer under 90% of asking has no chance whatsoever. I offered at 95% of asking on one last week and have been outbid. Of course that buyer may fail to get the money, but nevertheless that's my experience. Shortage of supply is real, but I'm still bearish and believe it will go on down a further 10-20% after this false dawn. Just fekkin awkward for me at the moment... ;)

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theres an almost UNLIMITED supply of money chasing a limited amount of properties.

You could have twice as many properties in the UK and there still wouldnt be enough for genuine homeowners when money is virtually given out for free to property speculators.

Lets just accept, that there ISNT an over supply of places to live in the UK, theres an oversupply of CREDIT.

Im sick of these monetary policies. I need my money for future use, like my retirement, for food etc. Stop erroding the value of fiat money.

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There is a lack of supply, BUT only in the sense there are not enough houses currently for sale, at reasonable prices, in areas where buyers want to live, that finance can be obtained on.

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theres an almost UNLIMITED supply of money chasing a limited amount of properties.

You could have twice as many properties in the UK and there still wouldnt be enough for genuine homeowners when money is virtually given out for free to property speculators.

Lets just accept, that there ISNT an over supply of places to live in the UK, theres an oversupply of CREDIT.

Im sick of these monetary policies. I need my money for future use, like my retirement, for food etc. Stop erroding the value of fiat money.

Yep

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Supply and demand is an economic model based on price, utility and quantity in a market. It concludes that in a competitive market, price will function to equalize the quantity demanded by consumers, and the quantity supplied by producers, resulting in an economic equilibrium of price and quantity. An increase in the quantity produced or supplied will typically result in a reduction in price and vice-versa. Similarly, an increase in the number of workers tends to result in lower wages and vice-versa. The model incorporates other factors changing equilibrium as a shift of demand and/or supply.

source:wikipedia

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There is a lack of supply, BUT only in the sense there are not enough houses currently for sale, at reasonable prices, in areas where buyers want to live, that finance can be obtained on.

I'm seeing a sea of houses to let where virtually none were previously, and many up for months at a time. Whether BTL scum or reluctant landlords, at some point somethings got to give, surely? A collapse in rental value and/or a lot of these LL going to the wall through voids. At what point does the rental market get saturated, and at the inflated London end, is it now only DSS propping it up?

A colleague of mine inherited a house in E London and after deeming it was 'unsaleable' (don't ask...) eventually did it up and rented it out At the rent they were asking, not a sniff from a private renter, but a choice of several on income support. So rents clearly above what the open rental market will stand are being paid to landlords by the taxpayer - another direct subsidy rental-prop to BTLs. IMO when (if) this scam is finally exposed and stopped, there will be carnage in the private rental market.

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I don't see a lack of supply when BTL "investors" are able to grab dozens of houses with almost nothing down. How is it so easy for them to occupy a whole street of properties?

Now someone has to build a dozen new houses to offset the monopoly and allow people to live independently as if the BTL guy wasn't in their way - that's the lack of supply

Edited by Stars

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There is a lack of supply, BUT only in the sense there are not enough houses currently for sale, at reasonable prices, in areas where buyers want to live, that finance can be obtained on.

Yes, the supply you refer to is indeed a much bigger issue. But I think some of the posters in this thread are simply confusing total availability of non ocupied dwellings with actual general residential stock with a "for sale" sign. There is no lack of the former (contrarily to what most property VI suggest), while the latter has been dramatically reduced in the last year to historical lows as potential vendors decided to "seat it out".

Edited by Old_Traveller

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There is always a lack of supply to meet everyone's aspirations.

However, that is not the same as a lack of supply.

When paying the cost of a private purchase or rent is prohibitive for the lower paid, does a 7-year waiting list for social housing count as a lack of supply ?

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Yes, the supply you refer to is indeed a much bigger issue. But I think some of the posters in this thread are simply confusing total availability of non ocupied dwellings with actual general residential stock with a "for sale" sign. There is no lack of the former (contrarily to what most property VI suggest), while the latter has been dramatically reduced in the last year to historical lows as potential vendors decided to "seat it out".

far better put than i managed! :)

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When paying the cost of a private purchase or rent is prohibitive for the lower paid, does a 7-year waiting list for social housing count as a lack of supply ?

It's a good point you make, but not applicable to houses for sale.

If the pressure for social housing results from homelessness, then it is a lack of supply. I count B&B accommodation in this category.

If the pressure for social housing is because people "want a place of their own", i.e. they are currently accommodated but with family or in some other shared housing arrangement, then that seems more like aspiration again.

So in this case, the situation becomes what is an appropriate standard of accommodation for very low paid people and how much should the state (i.e. taxpayers) stump up to provide that level of accommodation.

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So in this case, the situation becomes what is an appropriate standard of accommodation for very low paid people and how much should the state (i.e. taxpayers) stump up to provide that level of accommodation.

Actually the issue is a bit more complex than that; given that those in possession / ownership / control of land and are therefore by implication preventing cheap accommodation of these people, have absolutely no moral right to do so.

Edited by Stars

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Actually the issue is a bit more complex than that; given that those in possession / ownership / control of land and are therefore by implication preventing cheap accommodation of these people, have absolutely no moral right to do so.

I think you would find that if the state didn't prop up rents by subsidising the bottom end of the market through various rental support schemes, rents would be cheaper and there would be fewer BTL investors, leading to lower house prices.

Personally, I prefer to attack the problem from the other direction with higher minimum wages and higher tax-free bands coupled with removing such make-work schemes as tax credits, i.e. incentivise and reward people for working.

But I have a feeling we aren't going to agree on this.

BTW, I don't live in the house in my avatar.

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I think you would find that if the state didn't prop up rents by subsidising the bottom end of the market through various rental support schemes, rents would be cheaper and there would be fewer BTL investors, leading to lower house prices.

I think you might also find that if rents weren't large, domotivating and poverty inducing to start with the government would not find a net mandate to intervene in this manner; as it is you are correct, the government does exactly what it can in order not to solve the problem.

Personally, I prefer to attack the problem from the other direction with higher minimum wages and higher tax-free bands coupled with removing such make-work schemes as tax credits, i.e. incentivise and reward people for working.

Minimum wages funded with taxes on people's wages also raise rents, do not incentivise anything and simply increase unemployment and state dependency. This is just another way the government does whatever it can not to solve the problem.

But I have a feeling we aren't going to agree on this.

The key to solving it is to go back to what i said originally -

Those in excluding possession of the land that prevents cheap accommodation of these people (whether privately or publicly) have no moral right to it.

BTW, I don't live in the house in my avatar.

Ha ha..cool

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I think you might also find that if rents weren't large, domotivating and poverty inducing to start with the government would not find a net mandate to intervene in this manner; as it is you are correct, the government does exactly what it can in order not to solve the problem.

No, rents are large BECAUSE the government intervenes. If they didn't intervene, rents at the lower end would fall.

Minimum wages funded with taxes on people's wages also raise rents, do not incentivise anything and simply increase unemployment and state dependency. This is just another way the government does whatever it can not to solve the problem.

I'm talking about minimum wages funded by employers with no taxpayer input. And minimum wage-earners would not incur direct or indirect taxes.

The key to solving it is to go back to what i said originally -

Those in excluding possession of the land that prevents cheap accommodation of these people (whether privately or publicly) have no moral right to it.

My interpretation of your argument is that possession of property (and therefor doing what you want with it, whether renting it out or selling it) is somehow immoral. I don't subscribe to that view. However, I do think that the unintended consequence of state intervention is in fact to make rents more expensive than they otherwise should be.

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GotHousewithland wrote:------

"No, rents are large BECAUSE the government intervenes. If they didn't intervene, rents at the lower end would fall."

----------------------------------

Nope - the government didn't intervene much to pay rents in the nineteenth century and rents still buckled the poor into debt etc etc

The problems caused by rents predate welfare programs

GotHousewithland wrote: ----

"I'm talking about minimum wages funded by employers with no taxpayer input. And minimum wage-earners would not incur direct or indirect taxes."

--------------------------------

It would raise rents and increase unemployment

It's funny you can't see this - you claim government intervention has raised rents, but then go on to advocate government intervention

This rent issue really has been the tragedy of the government's intervention re poverty. The poor are largely in arrangements that mean any advantage given them in aggregate passes upwards out of their hands into rent and so to the landlord; they cannot be substantially helped without addressing the parasitical role of the landlord, in fact, addressing the parasitical role of the landlord is the only help they would need.

Winston Churchill made speeches in the house commons regarding this issue, in which he describes a bridge built with public funds to allow workers living on one side of a river to save a daily ferry fair of 2p (or whatever) and so lift these workers somewhat out of poverty. When the bridge was completed, it was discovered that rents in that catchment area had risen by (you guessed it) 2p a day. And so what was meant as an intervention to help the poor and a boost to industry ended up simply being yet another freebie for the owners of property.

GotHousewithland wrote:----------

"My interpretation of your argument is that possession of property (and therefor doing what you want with it, whether renting it out or selling it) is somehow immoral."

--------------------------------------

The ownership specifically of land has no moral basis, the word 'property' is too vague. Nobody made or provided the land, so nobody has any more natural right to exclude others from it than anyone else.

Morally speaking, where do you think the right to exclude other humans from bits of nature comes or came from?

GotHousewithland wrote:----------

"I don't subscribe to that view. However, I do think that the unintended consequence of state intervention is in fact to make rents more expensive than they otherwise should be."

--------------------------------------

Remember, the government first intervened to put land into private ownership.

Edited by Stars

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Why do all these BTL investors feel so smug when ultimately what they've done is bought a fleet of property at the peak of a property bubble?

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I think it depends on how you define 'supply'. If you define it as places with walls, a roof, electricity and water then there is no shortage of accommodation in the UK. If you define it as places someone will actually consider living and handing over money, be it rent or to buy, to live in - there's where the lack of supply is.

In my area there's plenty of places to live, but I would never voluntarily chose a Gunwharf rabbit hutch that gets the Bar 38 neon light thru the window every Friday and Saturday, or one of those hideous looking places they've thrown up by the Fratton Station roundabout.

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